Walmart Inc. is building on its early-payment program for suppliers to ensure diverse and minority-owned businesses have more equitable access to funding.
In the expanded program that starts Monday, qualified suppliers can get fast payments from Walmart at its lowest rates, the company said. The rates cover the cost of the program, and are far lower than the interest rates that banks would charge for financing, Walmart spokeswoman Tara House said.
Walmart defines diverse suppliers as U.S. privately held companies that are 51% owned and operated by women; minorities; veterans; people with a disability; and members of the gay and transgender community.
The Bentonville-based retailer sourced more than $13 billion in goods and services from 2,899 diverse suppliers last year, according to its 2020 Cultural, Diversity, Equity and Inclusion Report released Monday.
Scott McCall and Megan Crozier, chief merchandising officers of Walmart U.S. and Sam's Club, said in a joint news release Wednesday that they've "heard loud and clear from current and potential diverse suppliers that the biggest challenge to achieving growth is the ability to gain access to working capital."
The expanded program works just like the original one, which began in 2017. Walmart worked with financial technology company C2FO to provide suppliers with a simple interface that lets them hand-select the invoices on which they want to request early payments.
Walmart uploads suppliers' invoices to their C2FO accounts. Suppliers can then select the invoices for which they would like to receive early payment.
Suppliers could get their money in as little as 24 hours, according to the Walmart Early Payment Program suppliers guide online. Suppliers not using the program are paid in the more typical 30- to 90-day range after submitting their invoices, House said.
Participation in the program is open to all suppliers, House said, but is completely voluntary.
The rates suppliers pay are on a tiered system, House said. Those who don't use the early-pay program pay the highest rates, while those who do use it get a lower rate.
Now, businesses that qualify for the diverse and minority program will get an even lower rate.
"Diverse and minority suppliers could participate in the regular program before, but this one is more competitive," House said.
Walmart said it will provide initial funding for the expanded program. But the company plans to team with leading global and minority-owned banks to offer additional funds.
Historically, many of these suppliers have had a hard time securing bank loans to build or expand their companies.
Pamela Prince-Eason, president and chief executive officer of the Women's Business Enterprise National Council, said lack of access to funding is the biggest barricade holding back diverse and minority business owners.
"Walmart's effort is a game changer for suppliers who will benefit from this program," Prince-Eason said, "and the strongest example of big business using its scale to advance the growth of these important businesses, which in turn will grow communities and economies in extremely beneficial ways."
Doug McMillon, Walmart's president and chief executive officer, said in a note on the company's Supplier Inclusion webpage that Walmart seeks to grow its network of diverse suppliers.
"At Walmart, we believe we're at our best when we promote diversity across our supply chain," McMillon said. "For our suppliers, working with Walmart means access to the 275 million customers who shop our stores around the world each week."
"For us, supplier inclusion means delivering better products and a broader selection to the communities we serve," McMillon said. "We encourage diverse companies to explore new possibilities with Walmart."